THIS BLOG RATES THE S&P 500 BUY/SELL/OR HOLD EACH DAY WITH 2-GOALS FOR LONG TERM INVESTMENTS: (1) PRESERVE CAPITAL (2) BEAT THE S&P 500.
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Thursday, June 2, 2016

ADP PAYROLL REPORT (USA Today)“The private sector added 173,000 jobs in May,
payroll processor ADP said Thursday, possibly signaling that a government
report will reveal tepid employment growth for a second straight
month…Labor's total, however, is expected to be suppressed by the
now-settled Verizon strike, which idled about 40,000 employees. As a
result, a 160,000 advance Friday would be a solid showing -- equivalent to
200,000 in a normal month.” Story at…http://www.usatoday.com/story/money/2016/06/02/adp-businesses-add-173000-jobs-may/85270010/JOBLESS CLAIMS (CNBC/Reuters)“The number of Americans applying for unemployment
benefits unexpectedly fell last week, pointing to a tightening labor market. Initial
claims for state unemployment benefits slipped 1,000 to a seasonally adjusted
267,000 for the week ended May 28…” Story at…http://www.cnbc.com/2016/06/02/us-weekly-jobless-claims-may-28-2016.htmlCRUDE INVENTORIES (24/7WallSt)“U.S. commercial crude inventories decreased by 1.4
million barrels last week, maintaining a total U.S. commercial crude inventory
of 535.7 million barrels. The commercial crude inventory remains at
historically high levels for this time of year, according to the EIA.” Story
at… http://247wallst.com/energy-economy/2016/06/02/crude-oil-price-narrows-daily-loss-after-inventory-report/MARGIN DEBT (Advisor Perspectives)Chart and analysis at…http://www.advisorperspectives.com/dshort/updates/NYSE-Margin-Debt-and-the-SPXMy cmt: Many have pointed to the peak in Margin debt as
an important Bear-market signal.OBAMACARE - PUNISHING THE MIDDLE CLASS (Global Economic
Perspective)“At the heart of the matter is a redistribution scheme
that punishes the middle class the most, and the wealthy the least, for the
benefit of the poor….Thanks to Obamacare, it is better for the average
childless couple in California to make $63,000 than $72,000. Things are really
horrendous if someone makes $64,000.Taking Obamacare, federal, and state taxes into consideration, a couple
that makes $63,000 annually takes home $48,770. A couple that makes $64,000
takes home $42,360!” Details and commentary at…https://mishtalk.com/2016/06/01/obamacare-redistribution-and-the-disincentive-to-work/MARKET REPORT / ANALYSIS-Thursday, the S&P 500 was up 0.3% 2105. -VIX fell about 4% to 13.63 at the close. -The yield on the 10-year Treasury rose to 1.90%.Thursday we got another “overbought” signal on the tried
and true NYSE Overbought/Oversold Ratio (based on advance decline data) and
that is a bearish indication. It is not just high, the numbers are extreme. The
% of issues advancing over the last 10-days is over 60% on a 10-day basis and
over 55% on a 20-day basis.Those
numbers occur after significant bottoms, when investors are heavily buying, and
clustered around tops, although not necessarily major tops. We saw similar
numbers when the S&P 500 last made 2102 about 6-weeks ago. The index was
unable to hold its near-term high then and this stat suggests it won’t hold it
now.We can also see that the percentage of new-highs on the
NYSE was 4.4% Thursday at 2105 on the S&P 500. 6-weeks ago when the Index was at the recent
high of 2102, 4.3% of issues on the NYSE were making new highs.That is not enough improvement to instill
much confidence that conditions are materially better now.Overall though, most indicators remain bullish. I am
going to look hard at the 2110 number I have mentioned previously; if the
S&P 500 makes it there it may be time to increase my stock holdings. Steve
Grasso, trader and CNBC contributor, recommends waiting for new highs before
moving back in and there is wisdom in that advice too. MONEY TREND & SHORT TERM TRADINGThe short-term Money Trend indicator can be volatile and
it remains up, Thursday, and it’s currently mildly bullish.I continue to hold short positions mostly in
SH and some in QID in the trading
portfolio only. Those will have to go if the market exceeds my pain-target
of 2110 on the S&P 500. MARKET INTERNALS (NYSE DATA) The 10-day moving average of the percentage of stocks
advancing (NYSE) climbed to 60.7% Thursday. It was 57.6% Wednesday. A number
above 50% is usually GOOD news for the markets.On a longer term, the 150-day moving average of advancing
stocks climbed to 52.1%. A value above 50% generally indicates an
up-trend.The McClellan Oscillator (a
Breadth measure) was up and remained positive – a bullish indicator in the
short-term. New-highs outpaced New-lows. The spread (new-highs minus
new-lows) was +127 Thursday. (It was +109 Wednesday).The 10-day moving average of the change in spread increased
to +8. In other words, over the last 10-days, on average; the spread has
increased by 8 each day. Market Internals
remained positive on the market.

Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late.They are most useful when they diverge from
the Index.In 2014, using these
internals alone would have made a 9% return vs. 13% for the S&P 500 (in on
Positive, out on Negative – no shorting).Of course, few trend-following systems will do well in an extreme
low-volatility, nearly straight-up year like 2014.

Thursday, the Volume, VIX & Sentiment indicators were
all neutral.The Price indicator
(measuring the size of up vs down moves) was positive. The long-term NTSM
indicator remains HOLD, but it is only a whisker from a Buy signal.I ignored Buy signals recently, I may not
ignore them again.

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONOn 30 Dec I reduced my invested position in my retirement
account to 30% invested in stocks thru an S&P 500 Index fund (“C”-fund in
the TSP) and on 15 Jan I reduced stock allocation to zero in long-term
accounts. If the S&P 500 index closes
above 2110, I plan to add to my stock allocation.The S&P 500 peaked in Mid-May 2015 and has not been
able to break higher in the past 12-months. That looks like a top to me. See
“Why the Bull Market May be Dead” in my 14 December blog at…http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html

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About Me

I am an engineer with a lifelong interest in "playing with numbers" so what could be more fun than trying to develop a system that beats the stock market? Well, lots of things, but I decided to do this anyway.
While I am not a finance-professional, or professional investor, I have developed some skills.
I competed in two CNBC Million Dollar Portfolio contests finishing in the top 4% in 2008 (34,320th of 800,000) and the top 0.1% (448th of 500,000) in 2009. More importantly, I managed to sell out of my retirement accounts at or near the top in 2000 and 2007 and bought close enough to the bottom that I didn’t lose too much sleep. (Even Bill Gates lost SOME sleep.)
I hope that my thoughts will help you achieve your investing goals. Please remember that my ideas are free and there may be times when my ideas are worth less than what you paid.